The emergence of Vertical AI presents a significant opportunity and threat for Vertical SaaS companies. While Vertical SaaS has achieved remarkable success, its limitations in handling unstructured data and serving industries with low ACVs or tight margins are being addressed by AI. The decline of Chegg following ChatGPT’s launch serves as a stark warning of the disruptive potential of AI.

Leading venture capital firms believe Vertical AI has the potential to surpass Vertical SaaS in market size due to its ability to analyze unstructured data. This presents both opportunities and challenges for existing SaaS companies. They must not only integrate AI into their existing offerings but also explore partnerships or acquisitions with AI innovators to remain competitive. Failure to adapt could lead to disruption and displacement by more agile AI-powered competitors.

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